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Gold nears record high after Fed rate-cut bets. Tech shares lead Asia share rally

Tech shares rose on Thursday, boosting Asia stock indexes, while gold hovered at a record-high and the dollar sank as a weak U.S. Labour Market Report boosted bets that Federal Reserve interest rates would be cut.

It was almost certain that the U.S. shutdown would prevent the release of vital monthly payroll data on Friday. However, overnight, the ADP private employment report revealed the unexpected loss of jobs in September. The prior month had also been revised downwards.

Even without official labour data, traders priced in quarter-point Fed rates cuts at both of the remaining two policy meetings for the year.

Wall Street reached new record highs Wednesday as the promise of a more relaxed policy environment boosted Wall Street. The Philadelphia SE semiconductor index also rose by over 2%.

The Nikkei gained 0.5% in Japan, largely due to the gains made by chip sector stocks.

Taiwan's tech heavy bourse rose 1.5% while South Korea's KOSPI soared 2.8% following the signing of partnerships between chip giants Hynix and Samsung to supply OpenAI Data Centres.

Hong Kong's Hang Seng gained 0.5%.

According to Kyle Rodda of Capital.com, the ADP report suggests that "the U.S. economic situation is so dire, it requires further policy support." As a result, markets discount a higher probability for rate cuts in December and October.

He added that "after initial jitters the markets have shrugged off the U.S. Government shutdown, at least until now."

Rodda stated that the shutdowns have historically had a minimal impact on the economy, but the delay in critical economic data may increase uncertainty regarding the future of U.S. monetary policies and thus raise volatility.

As partisan differences prevented Congress and White House from coming to a funding agreement, the government shut down most of its operations Wednesday, setting up what could be an extended, bitter standoff.

Fed easing bets, along with some shutdown anxiety, pushed gold overnight to a new all-time record of $3,895.09. This also supported U.S. Treasuries and sent yields sharply down.

On Thursday, during Tokyo's trading hours, the yield on two-year Treasury bonds fell to its lowest level in two weeks at 3.531%.

The last time gold changed hands was around $3,865.

The U.S. Dollar Index, which measures the currency's performance against six major counterparts, remained near the overnight low of 97.459, reached one week ago. The last time it was at 97.672, it was slightly lower than Wednesday's closing price.

After a three-day decline of 1.8%, the dollar was unchanged at 147.01yen.

The euro increased slightly to $1.1738 and the sterling rose to $1.34835.

The oil prices rose on the prospect of tighter sanctions against Russian crude. They were looking to end a losing streak of three days and reach 16-week-lows.

Brent crude futures rose 0.2%, to $65.50 per barrel. U.S. West Texas Intermediate crude also increased 0.2%, to $61.92 per barrel.

(source: Reuters)